"Political language -- and with variations this is true of all political parties, from Conservatives to Anarchists -- is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind."
-- George Orwell, Politics and the English Language

Translate

Sunday, October 28, 2007

The Invisible Finger

Merrill Lynch’s directors may be weighing E. Stanley O’Neal’s future, but one thing is already guaranteed: a payday of at least $159 million if he steps down.

Mr. O’Neal, the company’s chairman and chief executive, is entitled to $30 million in retirement benefits as well as $129 million in stock and option holdings, according to an analysis by James F. Reda & Associates using yesterday’s share price of $66.09. That would be on top of the roughly $160 million he took home in his nearly five years on the job.

Under Mr. O’Neal, Merrill moved aggressively into lucrative businesses like the packaging of subprime mortgages and other complex debt securities. That led to a string of blow-out quarters — and blow-out paydays. Last year, Mr. O’Neal’s $46.4 million pay package made him Wall Street’s second-highest paid chief executive, behind Lloyd C. Blankfein of Goldman Sachs, who was paid $54.3 million, according to Equilar research.

But those big bets appeared to go bust this week. Merrill announced an $8.4 billion write-down, raising questions about whether Mr. O’Neal will keep his job. One thing that he surely will hold onto, though, are the giant paychecks he has collected.

“I lay the blame at the foot of the board,” Frederick E. Rowe Jr., a money manager and president of Investors for Director Accountability. “He was paid a tremendous amount of money to create a loss that is mind-boggling, and he obviously took risks that should never have been taken.”

Taking risks with other people's money, as with other people's lives, rarely imparts even a modicum of similar risk to one's own situation. The next person who smugly lectures you about how these CEOs earn every dime because of all the value they add, punch 'em right in the throat.